Types and Correction of Errors

An accounting error is an error in an accounting entry that was not intentional. When spotted, the error or mistake is often immediately fixed.

1. Correction Of Errors
Mudassir Raza

2. DISCUSSION
POINTS
LEARNING OBJECTIVE
Correct errors which are not revealed
by a trial balance
Distinguish between the different kinds
of errors that may arise.

3. TYPES OF ERROR
ERRORS OF OMISSION
Where a transaction is completely omitted
fromthe books. If we sold £90 goods to J,Brewer,
but did not enter it in either the sales account or
Brewer;s personal accounts, the trial balance
would still balance.

5. TYPES OF ERROR
ERRORS OF COMMISSION
This type of error occurs when the correct amount is
entered but in the wrong account, e.g. where a sale
of £11 to C.Green is entered in the account of K.
Green.

7. TYPES OF ERROR
ERRORS OF PRINCIPLE
where an item is entered in the wrong class of
account, e.g. if purchases of a fixed asset, such as a
van, is debited to an expenses account, such as
motor expenses account.

9. TYPES OF ERROR
COMPENSATING ERRORS
Where errors cancel each other out. If the sales
account was added up to be £10 too much and the
purchases account was also added up to be £10 too
much, then these two errors would cancel out in the
trial balance. This is because the totals of both the
debit side and the credit side of the trial balance will
be overstated by £10.

11. TYPES OF ERROR
ERRORS OF ORIGINAL ENTRY
Where the original figure is incorrect, yet double
entry is correctly done using the incorrect figure. For
example, where a sale should have totalled £150 but
an error is made in calculating the total on the sales
invoice. If it were caculated as £130, and £ 130 were
credited as sales and £ 130 were debited to the
personal account of the customer the trial balance
would still balance.

13. TYPES OF ERROR
COMPLETE REVERSAL ENTRIES
Where the correct accounts are used but each items
is shows on the wrong side of the account. Suppose
we had paid a cheque to D. Williams for £200, the
double entry of which should be debit D. Williams
£200, credit Bank £200 . In error it is entered as debit
bank £200, credit D.Williams £200. The trial balance
totals will still agree.

17. TYPES OF ERROR
TRANSPOSITION ERRORS
Where the wrong sequence of the individuals
characters within a number was entered (for
example, £142 entered instead of £124). This is a
common type of error and is very difficult to spot
when the error has occured in both the debit and the
credit entries, as the trial balance would still
balance. It is, however more common for this error to
occur on one side of the double entry only.When it
does, it is easier to find.

19. THANK YOU!